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Foreclosure crisis rich in unethical banks

There is no shortage of vacant, soon-to-be dilapidated houses in Oregon. If you pay close enough attention, youll see them: Theres a rectangular sticker  with writing in English and Spanish  on the entranceways noting the utilities have been shut off.

Beyond the neglected landscaping and buildup of grime on the driveway, all that sets these houses apart is the vast sense of emptiness and disappointment that surrounds them.

For what its worth, the gargantuan Ponzi scheme that has since been labeled the housing crisis, and that had been made possible via the introduction, marketing and push of subprime loans is firmly on the shoulders of the banks that conjured such greedy madness and the regulators who allowed it to proliferate.

Those institutions, which our society has time and time again been conditioned to trust in an advisory role, specifically targeted people who would otherwise not qualify for a standard home loan. They were being told the loan was safe, that refinance options were available down the road. And, at the time, there was no reason not to believe the loan specialists who were feeding this line to prospective homebuyers.

Unfortunately, those subprime loans were being packaged, resold and used to collateralize other financial ventures. When the bottom completely dissolved in 2008, everything collapsed.

This week, the Oregon Department of Justice announced that Oregon residents who lost their house due to foreclosure between Jan. 1, 2008 and Dec. 31, 2011 could be eligible to receive a portion of a $25 billion multistate settlement for fraudulent foreclosure practices initiated by the nations five largest mortgage servicers: Bank of America, CitiBank, JP Morgan Chase, Ally Financial/GMAC and Wells Fargo.

The agreement settles state and federal investigations that the servicers routinely signed foreclosure related documents outside the presence of a notary public and without really knowing whether the facts [the documents] contained were correct. Both of these practices violate the law, according to the National Mortgage Settlements website at www.nationalforeclosuresettlement.com.

As many as 23,000 Oregonians who were foreclosed upon during the specified timeframe could be eligible for a one-time settlement payment of $840 or more.

While that is welcome news for those families, it can also register as slim solace when weighed against the devastation of losing a home and having a poor credit rating.

And foreclosures are far from being yesterdays news. In July, as many as 50 new foreclosure proceedings were started daily in Oregon.

After four years of watching families vacate homes under the shadow of foreclosure, Oregon finally joined the ranks of other states by passing legislation requiring banks to meet with homeowners prior to initiating a non-judicial foreclosure.

Loan-servicing banks are refusing to participate in the mediation program, however, and the legislation is anemic regarding any state authority to force the loan servicers to the table.

Complicating matters, the Oregon Court of Appeals ruling in Niday vs. GMAC found that lending agencies using the Mortgage Electronic Registry System, or MERS, had transferred the loan assignment during foreclosure yet, through MERS, there was no evidence the assignment was recorded as is required for a non-judicial proceeding.

As a result, loan servicers have moved the foreclosure process into the courtroom and are effectuating the foreclosures in a way that doesnt require mediation.

We believe the banks, especially those listed above, that have time and again demonstrated predatory financial practices should be forced to the mediation table to reassess home values, either through the Home Affordable Modification Program  which admittedly has its own challenges, according to a Treasury Department report recently out  or other means.

There are reasonable, financially sound methods for remedying our housing and foreclosure plague. Unfortunately, there is a shortage of reasonable, financially ethical banking institutions willing to place the value of American family and home above the prospect of greater and greater profits.